Samsung Electronics’s global recall of Note7 smartphones received a fresh blow after a replacement device was blamed for smoke that led to the evacuation of a Southwest Airlines plane in the US.
The Federal Aviation Administration and the Consumer Product Safety Commission are investigating Wednesday’s incident, they said in e-mailed statements. Samsung started replacing Note7s around the world last month because a flaw in its lithium battery can lead to overheating, posing a burn hazard to consumers.
The phone on the Southwest plane was a replacement for a recalled Note 7, the device’s owner, Brian Green, told The Verge, a technology news-focused website.
Green said he picked up the phone at an AT&T store on 21 September, and showed The Verge a photograph of the box that displayed a black square symbol indicating a replacement phone. Bloomberg News last week interviewed a customer in China who said his new Note7 had exploded less than 24 hours after it was delivered.
Problems with replacements could complicate Samsung’s effort to recover from a recall that is already projected to cost more than US$1bn. The company has spent heavily on marketing its name in past years, and had hoped to get a head start on Apple by unveiling the Note7 weeks before a new iPhone hit the market. That advantage has now disappeared.
“The continued news reports about the Note7 aren’t good for Samsung, especially for its brand reputation,” said Park Kang-ho, an analyst at Daishin Securities in Seoul. “If the noise continues even as phones are replaced, consumers will start raising doubts over the next Galaxy S model, so the faster Samsung settles things the better for its business.”
The incident came on the same day that activist investor Paul Elliott Singer proposed Samsung separate into an operating company and a holding company. The billionaire wants the Suwon, Korea-based company to dual-list the former on a US exchange, pay out a special dividend and improve transparency by adding three independent board members.
Samsung shares surged to a record on Thursday, rising as much as 5% to 1,7m won. The stock has erased all its losses since announcing the recall on 2 September. The company is due to announce preliminary third-quarter earnings Friday, a period that includes the start of the recall.
I want to reiterate my call for consumers who have the recalled Galaxy Note7 to keep their smartphones powered down
The incident on the Southwest jet, which was waiting to depart from Louisville, Kentucky, involved “just smoke — no explosion or flames of any kind”, Lori Crabtree, a spokeswoman for the airline, said in an e-mailed statement. “A customer reported smoke emitting from an electronic device.”
Crabtree said the airline couldn’t confirm the model of phone. The US Federal Aviation Administration (FAA) and the US Consumer Product Safety Commission (CPSC) also didn’t confirm that the device was a new Note7. Bloomberg News has been unable to contact Green.
Samsung said it was seeking more information and declined to comment beyond an e-mailed statement.
“Until we are able to retrieve the device, we cannot confirm that this incident involves the new Note7,” the company said in the e-mail. “We are working with the authorities and Southwest now to recover the device and confirm the cause. Once we have examined the device we will have more information to share.”
No injuries
None of the 75 passengers and crew were injured after smoke was reported in the cabin of the Boeing 737 at 9.20am local time Wednesday, said Natalie Chaudoin, a spokeswoman for the Louisville Regional Airport Authority.
The phone’s owner put the device in his pocket during the flight’s normal safety announcements, said Salvador Melendez, spokesman for the Louisville Fire Department. He felt the device getting warm and by the time he took it out of his pocket it was too hot to handle, Melendez said.
Regulators issued restrictions that allow owners of the recalled Note7 to take it on a plane only if they turn it off, protect the power switch from accidental activation and don’t stow it in checked baggage.
“I want to reiterate my call for consumers who have the recalled Galaxy Note7 to keep their smartphones powered down and to immediately take advantage of the remedies being offered by Samsung,” CPSC chairman Elliot Kaye said in a statement on Wednesday. “Consumers should know that one of the remedies is a refund.”
There were at least 17 instances in which batteries smoked or caught fire on US airlines or air-cargo haulers in 2015, according to records kept by the FAA. Another three cases occurred this year to 15 January, the most recent date for which data was collected. All but one of those cases involved lithium-based cells. The Galaxy Note7 batteries are rechargeable lithium-ion.
After the consumer product commission announced the Note7 recall, the FAA and the Pipeline and Hazardous Materials Safety Administration — which jointly regulate potentially dangerous items on airlines — acted to ensure the recalled phones don’t endanger aircraft. — (c) 2016 Bloomberg LP